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Fleet Management Best Practices for Equipment Distributors 2 Table of Contents Introduction 2 Best Practices 3 Challenges 3 Fleet TCO 4 Technology Priorities 4 Fleet Management/Maintenance Software 4 Equipment Telemetry 4 Types of Data Collection 5 ERP Integration 6 Reporting 6 Types of Reports 7 Summary 7 Introduction With markets soft and recovery slow, equipment distributors are looking for any area in which to squeeze the most profit. Falling within the relatively high-margin area of services, fleet management is a viable business model for the equipment distributor whether that is 10 forklifts or a fleet of 100 power generators. Customers are increasingly looking for this kind of value-add from their equipment dealers; they no longer want the hassle of all the maintenance, servicing and other aspects of fleet management. But can your distribution business manage customer fleets efficiently enough for a decent margin? Are there ways to optimize the profitability of fleet management? Technology can be your friend for fleet management success as long as the technology solutions you choose provide your business with a deep understanding of fleet utilization and other key metrics. This white paper will discuss the specific components of a successful fleet management strategy for an equipment distributor whether you manage the fleet of a single large client, or have a business unit dedicated to selling fleet management services. While a fleet can be any size upwards of five or more pieces of equipment for a single customer, there is something to be said for larger fleets. They usually result in more efficient use of your workers for example, one technician servicing eight instead of three pieces of equipment.
Fleet Management Best Practices for Equipment Distributors 3 Falling within the relatively highmargin area of services, fleet management is a viable business model for the equipment distributor whether that is 10 forklifts or a fleet of 100 power generators But even smaller fleets are business worth going after as an equipment distributor, since those customers also can save substantial money by outsourcing fleet management. According to an Ernest & Young study of fleet TCO, companies with small to mid-size fleets can potentially save five to 35% in costs by outsourcing servicing, scheduling, and maintenance of their equipment. Best Practices The overarching goals of your consolidated fleet management strategy should include: 1. Being proactive anticipating servicing needs, resource availability and any changes required by operations on the fleet. 2. Managing the equipment lifecycle to peak profitability through the use of tools such as sales force automation, opportunity management, and campaign management. 3. Full integration of fleet management with fixed assets and service management. 4. Accurate up to date information about fleet operations and utilization, providing a control mechanism for fleet costs, as well as simplifying fleet maintenance. 5. Time, capital and human resources should be directed towards: a. Cost analysis. b. Measurement of the effective usage of equipment: Replacing units based on optimum life Removing non-productive units from your equipment base Redeploying equipment at other locations c. Recommendation of replacement cycles. 6. Provision of visibility for the customer. Challenges Limitations in technology and business process efficiencies can significantly handcuff your ability to provide optimal fleet management. Some of the issues you might face using outdated processes and technology can include: Having a stand-alone fleet management system that is not fully integrated with the rest of your business software such as your ERP system will result in duplication of efforts to capture data, and a disconnect between billing/operations and fleet metrics. Limited visibility on activity can lead to issues such as: Customers often contact servicing dealers directly, which can result in reactive management. In the event that the fleet manager is working on national accounts and relying on partnerships with other dealers, there is often a delay in submitting the servicing information, or it is deficient in the information provided. Customer accessibility is limited and reactive; for example, customers rely on the fleet manager to email reporting.
Fleet Management Best Practices for Equipment Distributors 4 The importance of real-time, on-demand reporting cannot be overstated gone are the days of waiting until month s end when several people pull together a report that is immediately outdated Fleet TCO A fleet s total cost of ownership (TCO) must take into account all of the following variables: Vehicle purchase price Capital/financing Vehicle disposal at end of useful life Dealer maintenance Parts and supplies Tires Maintenance overhead Compliance and safety costs addressed by electronic on board recording (EOBR) and other telemetry solutions. Technology Priorities Fleet Management/Maintenance Software Fleet management and fleet maintenance software, fully integrated with your ERP system, should offer functionality that includes: The ability to control fleet costs Improved and simplified fleet maintenance efficiency Comprehensive fleet and asset utilization details Minimized, or eliminated, paperwork Enhanced quality of information available to share with customers Remote servicing Equipment Telemetry Today s mobile technology enables the efficiency of more than your field service technicians and sales people working at customers sites. It also enhances your fleet management operations with a type of mobile technology known as equipment telemetry. Telemetry technology that allows data measurements to be made at a distance is available today for equipment activity as much as it is for drivers. A small monitor, or other piece of telemetric hardware fitted to the piece of equipment, gathers performance data such as hour-meter readings, miles driven, incidents, etc. It used to be that a worker had to plug a laptop into the equipment s console to transfer fleet data. But with todays technology, the data can now feed directly via web service into your company s ERP system from the telemetric device instantly and error-free, with no person needed as a middleman at the piece of equipment. Back at the office, or wherever they are, equipment fleet managers log onto the Internet to get equipment reports and activity, or request them to be sent in automated emails. And if staff should wish to change performance requirements on a remote piece of
Fleet Management Best Practices for Equipment Distributors 5 equipment, say its fuel consumption, telemetry can handle that too; today s devices are designed for two-way communication in the instances where telemetry providers easily integrate with your ERP system. This ability for remote management and control of equipment becomes especially powerful as the fleet grows in size; integrated data from telemetry helps to augment equipment and asset management, with cradle-to-grave visibility of equipment performance, in such cases as: Types of Data Collection Hour/Meter Readings Remote hour/meter readings are probably the most common type of data collected on equipment. Telemetry providers such as SpeedShield with its Fleet Online product that integrate easily with ERP for remote hour meter readings will help you know if your equipment is operating efficiently, has been serviced on time, and generally lets you optimize your fleet management. PM vs. Breakdown or Abuse Planned or periodic maintenance (PM) contracts can be more accurately drawn up based on equipment data collection through the online telemetry system. PM can be differentiated from other types of repair equipment breakdown, or abuse damage to the equipment. In the latter case, telemetric technology such as geo fencing can be used to see if equipment has gone beyond a designated area for the purpose of meeting the service contract and warranties. Features such as remote shut-off enable fleet managers to be proactive about minimizing abuse damage. Imagine if you could nip in the bud the additional wear and tear on your forklift driven across a large warehouse several times a day for the sole purpose of visiting the operator s girlfriend! Fuel Consumption In order to identify poorly performing lift trucks or other equipment in the area of fuel consumption, telemetry can pull all the data related to fuel spend, maintenance (or any other costs you wish to measure against) into your ERP system. Route Optimization Route optimization and logistics are enabled since online telemetry such as global positioning systems (GPS) and geo-fencing technology can identify and restrict the physical location of equipment. Under/overutilization of Equipment An integrated system of ERP and equipment telemetry provides a range of features that can be used to alter equipment settings, monitor and control operator access to equipment, and generate reports based on equipment or operator sessions. In this way, fleet managers can see if there are areas that are over-equipped, i.e. units sitting around unused while units in other departments are often down for service, therefore slowing productivity. Integrated ERP and telemetry can also define if a fleet manager has more or less equipment than necessary, or have the wrong classifications of equipment in their environment because they are being over or under-utilized.
Fleet Management Best Practices for Equipment Distributors 6 Information technology is an essential component of a distributor s business 40% of distributors plan ERP investment between now and 2015 - Guy Blissett, wholesale distribution industry expert at IBM, author of Facing the Forces of Change: Decisive Actions for an Uncertain Economy, 2010 ERP Integration If you are seeking to replace legacy software that no longer provides you needed functionality (such as real-time, transparent data sharing) then no doubt you re investigating Enterprise Resource Planning (ERP) systems. Guy Blissett, a wholesale distribution industry expert at IBM, writes in his 2010 book, Facing the Forces of Change: Decisive Actions for an Uncertain Economy, that 40% of distributors plan ERP investment between now and 2015 information technology is an essential component of a distributor s business. It should be noted that any telemetric hardware or system accessed remotely via web service can, and should be, integrated into your ERP system for full functionality. An ERP system, especially one built for the equipment distribution industry, can pull this remote data directly into the fleet management and fleet maintenance modules of the software system, for instant visibility and analysis by management and assigned employees. Be sure that, as part of your due diligence in researching and meeting various ERP vendors, you ask each of them questions relating to equipment fleet functionality. 1. Is fleet management/maintenance part of the software system, or must it be purchased as an additional module or add-on from a third party? 2. How easily and quickly does the ERP system integrate with telemetry providers? Who are their telemetry partners? 3. Can fleet management functionality be demonstrated pre-sale? 4. What kind of reports are available within the ERP system that would help a fleet manager perform his/her job better? 5. Which customers can you reference that have used the fleet management/ maintenance functionality within your ERP software? Any customers whose ERP systems are currently integrated with third-party telemetry providers? Reporting Best practice in fleet management really comes down to having an up-to-the-minute snapshot of each fleet s performance at all times, every day which is fully attainable when real-time reporting is built into your ERP system, including its fleet management/ maintenance modules. The importance of real-time, on-demand reporting cannot be overstated. Gone are the days of waiting until the month s end and then spending hours compiling all the information into a report on key dealership profitability indicators which are no longer valid as soon as the report is printed!
Fleet Management Best Practices for Equipment Distributors 7 Types of Reports Monthly Financial Statements: Analysis of all the information showing how profit/loss and dealership balance sheet numbers were arrived at. To be able to optimally adjust inventory levels and pricing, you can analyze trends in Margins by category (parts, service, equipment sales, etc.) Margins by manufacturer compare sales of OEM 1 vs. 2, etc. Meeting budget plan for the month/ the year Monthly Expense Analysis Report Expense fiscal history Expense review Key Indicators within your GL of profitability for your dealership as well as key operating information such as: Accounts Receivable Balances Bank Balances Accounts Payable Balances, etc. Asset Report: listing of all assets in the fleet program by customer and location. Cost per Hour (CPH) utilization matrix: the cost of repair/running hours. Maintenance expense history report. PMs due. Repairs needed. Unit cost comparison. Utilization expense summary. The breakeven/washout point of a piece of equipment. Operational costs compared to abuse-driven repair costs. Equipment downtime (for servicing). Summary What benefit is all this real-time, remote-access, fully integrated technology for fleet management? Any user can monitor the fleet with complete transparency so employees are left making decisions and helping your customers, as opposed to wasting time tracking the equipment. If you think you will be in the same business model in five years as you are now you would be wrong. Brace yourself for the future of fleet management for equipment distributors!
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